Some obligations are being settled after the due date, the cash level is falling, or forecasts indicate that in the coming months the undertaking may not have sufficient funds for all payments.
RESTRUCTURING AND INSOLVENCY
Corporate restructuring advisory
Company restructuring should begin with determining whether the undertaking has the conditions to continue its operations and what changes are necessary to restore its ability to meet obligations on time.
Liquidity problems may result from excessive indebtedness, a mismatched repayment schedule, deteriorating profitability, loss of part of revenues, increased costs, or several factors occurring simultaneously. The mere level of indebtedness does not yet determine which solution will be appropriate.
We advise entrepreneurs and management boards of companies that are beginning to experience difficulties in servicing their obligations, anticipate a deterioration in liquidity, or find themselves under pressure from creditors.
The first stage is diagnosis of the situation. We assess the undertaking's finances, the structure of its obligations, cash flows, security interests, the position of the most important creditors, and the prospects for operational activity. On this basis, the available options can be identified and the solution corresponding to the company's actual situation selected.
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On this page
- 01When is it worthwhile to begin an analysis of the company's situation?
- 02Company restructuring begins with diagnosis
- 03What do we analyse before selecting a solution?
- 04The mere level of indebtedness does not determine the course of action
- 05Which solution may be appropriate?
- 06Scope of restructuring advisory
- 07Restructuring adviser – when is it worthwhile to engage them in the matter?
- 08Restructuring and the situation of the management board
- 09How does cooperation work?
- 10Why Russell Bedford?
- 11Team leading restructuring projects
- 12Frequently asked questions about company restructuring
- 13Related services
- 14Let us discuss the company's situation
When is it worthwhile to begin an analysis of the company's situation?
There is no need to wait until the undertaking ceases to meet most of its obligations. The earlier the situation is assessed, the wider the range of possible actions remains.
Company restructuring begins with diagnosis
The choice of the type of proceedings should be preceded by an analysis of the causes of the undertaking's problems.
The situation of a company whose core business remains profitable, but for which the existing debt repayment schedule has become an excessive burden, is different from that of an undertaking which has been incurring losses from operating activities for a prolonged period.
It is also significant whether the difficulties are of a temporary nature or result from a permanent change in the business model, loss of market, increase in costs, or other factors affecting further operations.
Therefore, before selecting a solution, it is necessary to answer, inter alia, the following questions:
- whether the company is able to finance its current operations,
- what its cash flows will look like in the coming months,
- which obligations have the greatest impact on liquidity,
- what is the position of individual creditors,
- what security has been established,
- whether the undertaking has access to further financing,
- whether the core business can generate the funds needed to implement future arrangements with creditors.
Restructuring must lead to addressing the causes of the problem, not merely to postponing its consequences.
What do we analyse before selecting a solution?
Liquidity and cash flows
We examine what funds the undertaking currently generates and how the situation may look in the coming months. Forecasted inflows are compared with the dates of the most important payments and the costs of continuing operations.
Profitability of operating activities
We assess whether the undertaking's core business can finance its further operation and future servicing of obligations.
Debt structure
The significance lies not only in the total amount of obligations. Their type, maturity dates, financing costs, and the impact of individual payments on current operations are also important.
Creditors
We determine which creditors are of greatest significance for the further operation of the company and what their expectations are. The situation of a bank financing the undertaking, a strategic supplier, or a lessor may look different.
Security interests
Mortgages, pledges, guarantees, sureties, and other security interests affect the position of creditors and the possibilities for conducting negotiations regarding further repayment.
Undertaking's assets
The assessment covers their value, nature, and the significance of individual components for further operations.
Litigation and enforcement proceedings
Court and enforcement proceedings may directly affect the company's liquidity, access to assets, and the time remaining to prepare further actions.
Access to financing
We examine the possibility of maintaining existing financing, amending its terms, or obtaining funds needed for the further operation of the undertaking.
Feasibility of implementing the adopted solution
The conditions proposed to creditors must correspond to the company's real capabilities. Deferring payment will not solve the problem if, after its expiry, the undertaking remains unable to service its obligations.
The mere level of indebtedness does not determine the course of action
Two companies with a similar level of indebtedness may require completely different actions.
An undertaking with high debt may have grounds for effective restructuring if its operations remain profitable and the problem stems primarily from financing terms or the repayment schedule.
On the other hand, significantly lower indebtedness may constitute a serious threat if the company permanently incurs losses, has lost key clients, or lacks the funds necessary to continue its operations.
Therefore, the fundamental question is not solely how much the undertaking owes to creditors, but whether there is a realistic model for the company's continued operation and whether it can be financed.
Which solution may be appropriate?
The outcome of the analysis does not always lead to formal restructuring proceedings.
In some cases, the situation can be resolved through discussions with the most important creditors and by changing the terms of performance of obligations. In others, it will be necessary to apply a solution provided for by the Restructuring Law.
Agreement with creditors
If the situation of the undertaking and the position of the creditors allow room for negotiation, it is possible to agree on new deadlines, schedules or other terms for the performance of obligations.
Debt restructuring and negotiations with creditors
Arrangement approval proceedings
If the undertaking needs to conclude an arrangement with creditors, one of the possible options is arrangement approval proceedings.
Before commencing such proceedings, it is necessary to assess, inter alia, the structure of claims, the position of key creditors, and the feasibility of implementing the future arrangement.
Arrangement approval proceedings (PZU)
Restructuring plan
In the case of more complex problems, a deeper analysis of the causes of difficulties, remedial actions, financial needs and forecasts regarding further operations may be necessary.
Restructuring plan and satisfaction test
Other restructuring proceedings
If the situation of the undertaking requires greater court involvement or more far-reaching remedial actions, we also assess the remaining solutions provided for by the Restructuring Law.
Bankruptcy scenario
If the analysis conducted does not confirm a realistic possibility of rehabilitating the undertaking, it is necessary to assess the grounds for bankruptcy and the consequences of continuing operations.
Bankruptcy of an entrepreneur and a company
Scope of restructuring advisory
The scope of work depends on the stage at which the undertaking is located and on the causes of its problems.
We can begin with a financial and legal analysis of the company, the organisation of information on obligations, and the preparation of forecasts enabling an assessment of the possibility of continuing operations.
On this basis, we prepare options for further action and their consequences for the undertaking. If the situation allows for discussions with creditors, we establish negotiation assumptions and the terms that the company can realistically perform.
When a formal solution is required, we prepare the undertaking for the appropriate process, organise data concerning creditors and liabilities, and support the preparation of documents and actions required at subsequent stages.
In more complex projects, the work may also include financial forecasts, a restructuring plan, arrangement proposals and an analysis of the consequences of individual scenarios.
Restructuring adviser – when is it worthwhile to engage them in the matter?
The role of the restructuring adviser does not begin only at the moment formal proceedings are initiated.
Earlier engagement allows us to assess the causes of the difficulties, identify which solutions are still available and determine whether the situation can be resolved without commencing proceedings.
The adviser may participate in analysing the undertaking's situation, preparing action scenarios, conducting discussions with creditors, drafting documents and forecasts, and preparing the company for formal restructuring.
If an undertaking seeks a restructuring adviser or restructuring law firm only at the moment when the possibilities for settling liabilities have been seriously limited, the range of available solutions may be narrower than if work had been commenced earlier.
Restructuring and the situation of the management board
A deteriorating financial situation of the company requires the management board to continuously assess the ability to continue fulfilling liabilities.
As problems escalate, it is necessary to consider both available restructuring solutions and the risks associated with the insolvency of the undertaking.
The analysis conducted for the management board should therefore address not only what actions could improve the company's situation, but also whether continuing operations under the existing model remains justified.
If circumstances arise indicating that restructuring may not lead to a lasting improvement in the situation, a separate assessment of the insolvency scenario and the obligations of the management board is required.
How does cooperation work?
Assessment of the situation
We determine what led to the current problems, what the company's current situation is, and which liabilities require the most urgent attention.
Financial and legal analysis
We review financial data, cash flows, the creditor structure, financing agreements, security interests, court and enforcement proceedings, and forecasts regarding further operations.
Action scenarios
We present solutions possible in the specific situation and their consequences for the undertaking.
Preparation of the solution
The scope may include preparation for negotiations, financial forecasts, a restructuring plan, arrangement proposals, or documents required to commence the formal process.
Negotiations and implementation
We support the management board in discussions with creditors and in actions necessary to implement the selected scenario.
Why Russell Bedford?
Law and finance in a single process
The situation of an indebted undertaking cannot be assessed solely on the basis of legal provisions. The decision must also take into account cash flows, profitability, the liability structure, security interests and the possibilities for further financing.
In projects, restructuring advisers, lawyers, financial experts, tax advisers and statutory auditors may collaborate.
First diagnosis, then procedure
The starting point is the situation of the undertaking. Only after analysing it can one assess whether the issue requires negotiations, formal restructuring or another solution.
Support in negotiations with creditors
We prepare the undertaking for negotiations with banks, financing institutions, suppliers and other creditors, and help define the terms that the company will be able to fulfil.
Perspective of the undertaking and the creditor
We also advise creditors of undertakings undergoing restructuring or insolvency. This enables the proposed solutions to be assessed from the perspective of the entities that will decide on their acceptance.
Team leading restructuring projects
Restructuring projects are led by restructuring advisers supported by lawyers as well as financial and tax experts.
The composition of the team is tailored to the nature of the case, the debt structure and the planned course of action.
In projects covering formal proceedings, persons holding the qualifications required to perform the relevant functions in restructuring proceedings are engaged.
Paweł Szalewicz
Attorney-at-law | Restructuring adviser at Russell Bedford Poland
Full biography and experience of the expertFrequently asked questions about company restructuring
Company restructuring encompasses actions aimed at adapting the manner of operation of the undertaking and the conditions for performing its obligations to the current financial situation. Depending on needs, it may include financial and operational measures, negotiations with creditors or formal restructuring proceedings.
Related services
Debt restructuring and negotiations with creditors
Support in renegotiating repayment terms and in negotiations with banks, financiers, suppliers, and other creditors.
Arrangement approval proceedings (PZU)
Support in preparing proceedings and actions related to concluding an arrangement with creditors.
Restructuring plan and satisfaction test
Analysis of the causes of difficulties, remedial actions, forecasts, and the economic consequences of possible scenarios.
Bankruptcy of an entrepreneur and a company
Analysis of a situation requiring an assessment of the grounds for insolvency and the obligations of persons managing the company.
Advice for creditors
Support for creditors of enterprises undergoing restructuring or insolvency.
Let us discuss the company's situation
At the initial stage, we primarily need information on the enterprise's current liquidity, the structure of liabilities, the most significant creditors, and the events that led to the current situation.
On this basis, the scope of further analysis and solutions requiring verification can be determined.
The information presented on the website is of a general nature and does not constitute legal or restructuring advice. An assessment of a specific situation requires an analysis of its individual circumstances.